How does SL in Rehab Process show on credit reports?

[Anonymous]

Currently have a Fed Student Loan in the Rehab process and it is reporting C every month since March 2020 is this accurate? Rehab is scheduled to complete in April 2021 and each month credit score dips due to new month reporting of a collection from this Fed Student Loan. I assumed under the CARES Act they would have to report the month as satistfactory and also has anyone had a Rehab SL prior to CARES Act how did it report on your credit reports? TIA

[quikj9]

Congrats on rehabbing your student loans! I completed my rehab a few months ago. Trust me when I say the time will go by quicker than you think. 

The way in which your loans are being reported is accurate. Your servicer will not update the payments as being current on your credit report. You'll get a score boost once the US Dept of Ed collection accounts are removed from your report. Some are lucky enough to have their original tradelines removed as well yielding additional score gains. This only happened to me on Experian. You'll likely also gain some points when your new backdated loan in good standing starts reporting. 

All of these things listed above will happen AFTER you complete rehab. You won't notice any changes on your credit report until then. 

[Anonymous]

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@Anonymous wrote:

Currently have a Fed Student Loan in the Rehab process and it is reporting C every month since March 2020 is this accurate? Rehab is scheduled to complete in April 2021 and each month credit score dips due to new month reporting of a collection from this Fed Student Loan. I assumed under the CARES Act they would have to report the month as satistfactory and also has anyone had a Rehab SL prior to CARES Act how did it report on your credit reports? TIA

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This is correct reporting.

If it was to suddenly start reporting "ok" or green check mark, that would cause other issues with reporting like restarting the 7 year reporting window. In fact if it was suddenly a positive account that would extend reporting to 10 years. This you do not want.

It is a collection and will be a collection until you finish you end of the agreement making 9 or 10 on time payments in 9 or 10 months (depending on loan type).

This is for the best and while it sucks now, it will be better once you are done.

I have 11 defaulted SLs with 11 CAs reporting and this is how they report monthly. Same for SO, he has 7 defaulted and 7 matching CAs. We finish(ed) rehab this month and hope by next month the CAs are gone and can only hope the defaulted loans disappear (no guarantee, 50/50 chance). Ours are very old, so many have or will age off, anyway, but some sooner than others because of the rehabs.

Good luck!

[Anonymous]

Thanks for the insight. Only US Dept of Ed is currently reporting on my reports and the reporting started in March 2020. I dont show any reporting prior to March from any other loan servicer I think bc these loans are old from a consollidation i did in 2012. I know after the Rehab process completes everything post default will fall off completely and a new loan servicer will report on my credit reports. My other question is if my loan goes back to the original servicer, (i.e. Navient) will late payments pop up from before they went into default?  Also wondering how much my credit score will improve after default this the only negative on my report.

[Anonymous]

Thanks for replying. Were your scores dropping each month during the Rehab process? 

Any advice on things you felt like worked to boost your credit score during the Rehab?

[Anonymous]

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@Anonymous wrote:

Thanks for replying. Were your scores dropping each month during the Rehab process? 

Any advice on things you felt like worked to boost your credit score during the Rehab?

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My scores did not drop each month from their reporting, but I did have them remove and re-add the loans (one servicer of 3 did this) and those did hurt.

The only thing you can do is really to wait out the rehab. My SO was much more successful in getting his scores to rise, but his SLs (OCs and CAs) were aging off during rehab, so that attributed to it, I believe.

My SLs (OCs and CAs) remained for the most part during rehabs and I have seen little movement in my scores. I will just have to wait until they come off in the coming month or so.

The old lates, if they are past 7 years and already aged off, will not reappear. The US Dept of ED account(s) will be removed and then only positive and backdated SLs will be reporting, with no lates if they are 7+ years old. They generally do not add lates on if they are already gone, so I would not worry about that.

Once rehab is done you will be in a much better place. I know it is hard to be patient, but that is all you can really do for the time being.

Good luck!

[quikj9]

My scores didn't drop during rehab either. I felt that the rehab period gave me time to work on my other baddies. If you have any other negatives on your profile, I would focus on those. That way once your rehab is complete, you'll be in a much better place.

I agree with @Anonymous, patience is key. The time will pass faster than you expect.